RBI Cuts Repo Rate to 6.0% — First Reduction in 18 Months

The Reserve Bank of India's Monetary Policy Committee voted 4-2 to cut the repo rate by 25 basis points to 6.0% — the first rate reduction in eighteen months. The decision reflected growing confidence that retail inflation, which has been trending lower, is on a durable path toward the 4% target.

CPI inflation for April came in at 3.8%, the lowest reading since early 2020 and comfortably below the RBI's upper tolerance band of 6%. Governor Sanjay Malhotra noted that food price normalisation, a good Rabi crop output, and easing global commodity prices have all contributed to the favourable inflation picture.

Impact on key sectors

• —Home loan EMIs: expected to fall by ₹500–800/month on a ₹50L 20-year loan
• —Auto sector: cheaper financing expected to boost volumes in Q2
• —Real estate: lower cost of capital positive for developers and buyers
• —Banking stocks: NIM compression concerns offset by volume growth expectations
• —Nifty: gained 1.2% on the day of the announcement

The MPC is committed to a durable alignment of inflation with the target while supporting growth. Today's decision reflects that balance. — RBI Governor